The Data Institute Acquisition Manual

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ACQUISITION MANUAL for THE TARGET COMPANY

6
Corporate Development
7
Product Management
8
Overseas Development
9
Product Distribution & Service
10
Advertising + P.R.
16
New Technology Primers
17
Physical Process & Orders
18
Competition Analysis
19
Product Perceptions
20
Customer Perceptions
Financial
Industry
Markets
Products
Data Grids
World MDB
Research MDB
Product MDB
Corporate MDB
Reference MDB

Volume
13

 

Human Resources Director's Screening Manual

Screening, selection and remuneration of company personnel both during and after acquisition is an integral part of the prospects for the Company profitability. An improperly screened, badly selected and poorly remunerated personnel, at all levels, will drastically reduce the Company's profitability.

Training is the most important aspect contributing to the efficiency of the Company personnel; specifically issues of initial job training and continuous training whilst on the job.

Analysis of all levels of the manpower resources of the Company is given in this section and an aggressive and critical appraisal is made. This is done in relation to the competitors of the Company as well as the industry norms in the country/s of operation.

Fundamental issues, often involving painful surgery throughout both management and staff, may be applicable in the Company especially when one compares the relative strengths and weaknesses of the Company with that of their competitors.

Finally this section looks at the financial ramifications of investment in Personnel & Staff Improvement scenarios. The financial performance of the Company is ultimately dependent on the attainment of their personnel and staff.


 

1

The Target Company

 

PERSONNEL MANAGEMENT

 

MANAGEMENT OBJECTIVES



The industry must build a true team and weld individual efforts into a common effort whereby each member of the enterprise contributes something different, but they must all contribute towards a common goal. Their efforts must all pull in the same direction, and their contributions must fit together to product a whole - without gaps, without friction, without unnecessary duplication of effort.

Business performance therefore requires that each job be directed towards the objectives of the whole business; and in particular each manager's job must be focused on the success of the whole. The performance that is expected of the manager must be derived from the performance goal of the business; his results must be measured by the contribution they make to the success of the enterprise. The manager must know and understand what the business goals demand of him in terms of performance, his superior must know what contribution to demand and expect of him, and must judge him accordingly. If these requirements are not met, managers are misdirected and their efforts are wasted. Instead of team work, there is friction, frustration and conflict.

Management by objectives requires major effort and special instruments. For in the business enterprise managers are not automatically directed towards a common goal. On the contrary, business, by its very nature, contains three powerful factors of misdirection: in the specialized work of most managers; in the hierarchical structure of management; and in the differences in vision and work and the resultant insulation of various levels of management.

A favorite story at management meetings is that of the three stone-cutters who were asked what they were doing. The first replied: 'I am making a living.' The second kept on hammering while he said: 'I am doing the best job of stone-cutting in the entire county.' The third one looked up with a visionary gleam in his eyes and said: 'I am building a cathedral.'

The third man is, of course, the true 'manager'. The first man knows what he wants to get out of the work and achieves precisely this. He is likely to give a 'fair day's work for a fair day's pay'. But he is not a manager and will never be one.

It is the second man who is a problem. Workmanship is essential; without it no work can flourish; in fact, an organization demoralizes if it does not demand of its members the most scrupulous workmanship they are capable of. But there is always a danger that the true workman, the true professional, will believe that he is accomplishing something when in effect he is just polishing stones or collecting footnotes. Workmanship must be encouraged in the business enterprise. But it must always be related to the needs of the whole.


The majority of managers in any business enterprise are, like the second man, concerned with specialized work. True, the number of functional managers should always be kept at a minimum and there should be the largest possible number of 'general' managers who manage an integrated business and are directly responsible for its performance and results. However, even with the utmost application of this principle the great bulk of managers will remain in functional jobs. This is particularly true of the younger managers.

A man's habits as a manager, his vision and his value, therefore, will as a rule be formed while he does functional and specialized work; and it is essential that the functional specialist develops high standards of workmanship, that he strive to be 'the best stone-cutter in the county'. For work without high standards is dishonest. It corrupts the man himself. It corrupts those under him. Emphasis on, and drive for, workmanship produces innovations and advances in every area of management. That managers strive to do 'professional personnel management', to run 'the most up-to-date plant', to do 'truly scientific market research', to 'put in the most modern accounting system', or to do 'perfect engineering' must be encouraged.

But this striving for professional workmanship in functional and specialized work is also a danger. It tends to direct a man's vision and efforts away from the goals of the business. The functional work becomes an end in itself. In far too many instances the functional manager no longer measures his performance by its contribution to the enterprise, but only by his own professional criteria of workmanship. He tends to appraise his subordinates by their craftsmanship, to reward and to promote them accordingly. He resents demands made on him for the sake of business performance as interference with 'good engineering', 'smooth production', or 'hard-hitting selling'. The functional manager's legitimate desire for workmanship becomes, unless counter-balanced, a centrifugal force which tears the enterprise apart and converts it into a loose confederation of functional empires, each concerned only with its own craft, each jealously guarding its own 'secrets', each bent on enlarging its own domain rather than on building the business.

The danger will be greatly intensified by the technological changes now under way as the numbers of highly educated specialists working in the business enterprise are bound to increase tremendously; and so will the level of workmanship demanded of these specialists. The tendency to make the craft (or function) an end in itself will therefore be even more marked than it is today. But at the same time the new technology will demand much closer co-ordination between specialists and it will demand that functional men even at the lowest management level see the business as a whole and understand what it requires of them. The new technology will need both the drive for excellence in workmanship and the consistent direction of managers at all levels towards the common goal.



1. MANAGEMENT DIRECTION

The hierarchical structure of management aggravates the danger that what the 'boss' does and says, his most casual remarks, his habits, even his mannerisms, tend to appear to his subordinates as calculated, planned and meaningful.

"All you ever hear around the place is human-relations talk; but when the boss calls you on the carpet it's always because the budget figure is too high; and when it comes to promoting a guy, the plums always go to those who do the best job filling out accounting forms."

This is one of the most common tunes, sung with infinite variations on every level of management. It leads to poor performance - even in cutting the budget figure. It also expresses loss of confidence in, and absence of respect for, the company and its management.

Yet the manager who so misdirects his subordinates does not intend to do so as he genuinely considers human relations to be the most important task of his line managers. Yet he talks about the burden figure because he feels that he has to establish himself with his men as a 'practical man', or because he thinks that he shows familiarity with their problems by talking their 'patois'. He stresses the accounting forms only because they annoy him as much as they do his men - or he may just not want to have any more trouble with the comptroller than he can help, yet alas, to his subordinates these reasons are hidden; all they see and hear is the question about the burden figure, the emphasis on forms.

The solution to this problem requires a structure of management which focuses both the manager and his attention on what the job, rather than what the boss demands. To stress behavior and attitudes, as does a good deal of current management literature,  cannot solve the problem. It is likely instead to aggravate it by making managers self-conscious in their relationships. Indeed, everyone familiar with business today has seen situations in which a manager's attempt to avoid misdirection through changing his behavior has converted a fairly satisfactory relationship into a nightmare of embarrassment and misunderstanding. The manager himself has become so self-conscious as to lose all easy relationship with his men; and the men in turn react with: 'So help us, the old man has read a book; we used to know what he wanted of us, now we have to guess.'



2. MANAGEMENT LEVELS

The misdirection that can result from the difference in concern and function between various levels of management is illustrated in the following story, called “The mystery of the broken washroom door”.

The newly appointed comptroller of a railroad noticed, when going through the accounts, that extraordinarily large sums were spent each year for the replacement of broken doors in passenger stations. He found that washroom doors in small stations were supposed to be kept locked, with the key obtainable from the ticket agent on request. For economy reasons the agent was only issued one key per door - a long-defunct manager had decreed this economy measure and had preened himself on thus saving the company two hundred dollars at one stroke. Hence when a customer walked off without returning the key - as happened all the time - the agent had a locked door on his hands and no means of opening it. To get a new key made (cost $1) was however regarded as a 'capital expenditure', and agents could make capital expenditures only with the approval of the company headquarters, which it took six months to obtain. 'Emergency repairs', however, an agent could make on his own and pay for out of his cash account. There could be no clearer emergency than a broken washroom door - and every small station has an axe!

This may seem the height of absurdity, yet every business has its 'broken washroom doors', its misdirection, its policies, procedures and methods that emphasize and reward wrong behavior, penalize or inhibit right behavior. In most cases the results are more serious than an annual twenty-thousand-dollar bill for washroom doors.

This problem, too, cannot be solved by attitudes and behavior; for it is rooted in the structure of the enterprise. Nor can it be solved by 'better communications'; for communications presuppose common understanding and a common language, and it is precisely that which is usually lacking.

It is no accident that the old story of the blind men meeting up with an elephant on the road is so popular among management people. For each level of management sees the same 'elephant' - the business - from a different angle of vision. The production foreman, like the blind man who felt the elephant's leg and decided that a tree was in his way, tends to see only the immediate production problems. Top management - the blind man feeling the trunk and deciding a snake bars his way - tends to see only the enterprise as a whole; they see stockholders, financial problems, altogether a host of highly abstract presages and figures. Operating management - the blind man feeling the elephant's belly and thinking himself up against a landslide - tends to see things functionally. Each level needs its particular vision; it could not do its job without it. Yet, these visions are so different that people on different levels talking about the same thing often do not realize it - or, as frequently happens, believe that they are talking about the same thing, when in reality they are poles apart.

An effective management must direct the vision and efforts of all managers towards a common goal. It must ensure that the individual manager understands what results are demanded of him. It must ensure that the superior understands what to expect of each of his subordinate managers. It must motivate each manager to maximum efforts in the right direction. And while encouraging high standards of workmanship, it must make them the means to the end of business rather than ends in themselves.

 

3. MANAGER OBJECTIVES

Each manager, from the 'big boss' down to the maintenance foreman or the chief clerk, needs clearly spelled-out objectives. These objectives should lay out what performance the man's own managerial unit is supposed to produce. They should lay out what contribution the manager can expect from other units towards the attainment of his own objectives. Right from the start, in other words, emphasis should be on team-work and team results.

These objectives should always derive from the goals of the business enterprise. In some companies, one has found it practicable and effective to provide even a foreman with a detailed statement of not only his own objectives but those of the company and of the department. Even though the company is so large as to make the distance between the individual foreman's production and the company's total output all but astronomical, the result has been a significant increase in production. Indeed, this must follow if we mean it when we say that the foreman is 'part of management'. For it is the definition of a manager that in what he does he takes responsibility for the whole - that, in cutting stone, he 'builds the cathedral'.

The objectives of every manager should spell out his contribution to the attainment of company goals in all areas of the business. Obviously, not every manager has a direct contribution to make in every area, in that the contribution which marketing makes to productivity, for example, may be very small. But if a manager and his unit are not expected to contribute towards any one of the areas that significantly affect prosperity and survival of the business, this fact should be clearly brought out. For managers must understand that business results depend on the balance of efforts and results in a number of areas. This is necessary both to give full scope to the craftsmanship of each function and specialty, and to prevent the empire-building and clannish jealousies of the various functions and specialties. It is necessary also to avoid over-emphasis on any one key area.

To obtain balanced efforts the objectives of all managers on all levels and in all areas should also be keyed to both short-range and long-range considerations, and of course, all objectives should always contain both the tangible business objectives and the intangible objectives for manager organization and development, worker performance and attitude and public responsibility. Anything else is short sighted and impractical.

 

4. MANAGER CONTROL

Proper management requires balanced stress on objectives, especially by top management. It rules out the common and pernicious business malpractice: management by 'crisis' and 'pushes'.

There may be companies in which management people do not say: 'The only way we ever get anything done around here is by making a push on it'. Yet, 'management by push' is the rule rather than the exception. That things always collapse into the status quo only three weeks after the push is over, everybody knows and apparently expects. The only result of an 'economy push' is likely to be that messengers and typists get fired, and that $100,000 executives are forced to do $400-a-week work typing their own letters. Yet many managements have not drawn the obvious conclusion that pushes are, after all, not the way to get things done.

Albeit over and above its ineffectiveness, management by push misdirects and thus puts all emphasis on one phase of the job to the inevitable detriment of everything else.

In an organization which manages by pushes, people either neglect their job to get on with the current push, or silently organize for collective sabotage of the push to get their work done. In either event they become deaf to the cry of 'wolf'. And when the real crisis comes, when all hands should drop everything and pitch in, they treat it as just another case of management-created hysteria.

Management by push, like management by 'bellows and meat axe', is a sure sign of confusion. It is an admission of incompetence. It is a sign that management does not know how to plan. But, above all, it is a sign that the company does not know what to expect of its managers - that, not knowing how to direct them, it misdirects them.

By definition, a manager is responsible for the contribution that his component makes to the larger unit above him and eventually to the enterprise. His performance aims upward rather than downward. This means that the goals of each manager's job must be defined by the contribution he has to make to the success of the larger unit of which he is a part. The objectives of the district sales manager's job should be defined by the contribution he and his district salesforce have to make to the sales department, the objectives of the project engineer's job by the contribution he and his engineers make to the engineering department. The objectives of the general manager of a subsidiary should be defined by the contribution his unit has to make to the objectives of the parent company.

This requires each manager to develop and set the objectives of his unit himself. Higher management must, of course, reserve the power to approve or disapprove these objectives; but their development is part of a manager's objectives - indeed, it is his first responsibility. It means, too, that every manager should responsibly participate in the development of the objectives of the higher unit of which his is a part to give him a sense of participation is not enough. Being a manager demands the assumption of a genuine responsibility. Precisely because his aims should reflect the objective needs of the business, rather than merely what the individual manager wants; he must commit himself to them with a positive act of assent; he must know and understand the ultimate business goals, what is expected of him and why, what he will be measured against and how. There must be 'a meeting of minds' within the entire management of each unit. This can be achieved only when each of the contributing managers is expected to think through what the unit objectives are; in other words, are led, to participate actively and responsibly in the work of defining them. Thus only if his lower managers participate in this way can the higher manager know what to expect of them and can make exacting demands.

This is so important that some of the most effective managers go one step further. They have each of their subordinates write a 'manager's letter' twice a year. In this letter to his superior, each manager first defines the objectives of his superior's job and the objectives of his own job as he sees them. He then sets down the performance standards which he believes are being applied to him. Next, he lists the things he must do himself to attain these goals - and the things within his own unit he considers the major obstacles. He lists the things his superior, and the company, can do that help him, and the things that hamper him. Finally, he outlines what he proposes to do during the next year to reach his goals. If his superior accepts this statement, the 'manager's letter' becomes the charter under which the manager operates.

This device, like no other brings out how easily the unconsidered and casual remarks of even the best 'boss' can confuse and misdirect. One large company has used the 'manager's letter' for ten years. Yet almost every letter still lists as objectives and standards things which completely baffle the superior to whom the letter is addressed. Thus whenever he asks: 'What is this?' he gets the answer: 'Don't you remember what you said last spring going down with me in the elevator?'

The 'manager's letter' also brings out whatever inconsistencies there are in the demands made on a man by his superior and by the company. Does the superior demand both speed and high quality when he can get only one or the other? And what compromise is needed in the interest of the company? Does he demand initiative and judgment of his men - but also that they check back with him before they do anything? Does he ask for their ideas or suggestions - but never uses or discusses them?

Does the company expect a small maintenance team to be available immediately whenever something goes wrong in the office, and yet, bend all its efforts to the completing of new designs? Does one expect a manager to maintain high standards of performance but forbid him to remove poor performers? Does one create the conditions under which people say: 'I can get the work done as long as I can keep the boss from knowing what I am doing?'

These are common situations. They undermine spirit and performance. The 'manager's letter' may not prevent them. But at least it brings them out in the open, shows where compromises have to be made. Objectives have to be thought through, priorities have to be established, and behavior has to be changed.

As this device illustrates: managing managers requires special efforts not only to establish common direction, but to eliminate misdirection. Mutual understanding can never be attained by 'communications down', can never be created by talking. It can result only from 'communications up'. It requires both the superior's willingness to listen and a tool especially designed to make lower managers heard.

 

5. MANAGEMENT CONTROL MEASUREMENT

The greatest advantage of management by objectives is perhaps that it makes it possible for a manager to control his own performance. Self-control means stronger motivation: a desire to do the best rather than just enough to get by. It means higher performance goals and broader vision. Even if management by objectives were not necessary to give the enterprise the unity of direction and effort of a management team, it would be necessary to make possible management by self-control.

So far one has not considered 'control' at all - but 'measurements'. This was intentional as 'control' is an ambiguous word. It means the ability to direct oneself and one's work. It can also mean domination of one person by another. Objectives are the basis of 'control' in the first sense; but they must never become the basis of 'control' in the second, for this would defeat the purpose. Indeed, one of the major contributions of management by objectives is that it enables us to substitute management by self-control for management by dominations.

That management by self-control is highly desirable will hardly be disputed in business today. Its acceptance underlies all the talk of 'pushing decisions down to the lowest possible level' or of 'paying people for results'. But to make management by self-control a reality requires more than acceptance of the concept as right and desirable. It requires new tools and far-reaching changes in traditional thinking and practices.

To be able to control his own performance a manager needs to know more than what his goals are and he must be able to measure his performance and results against that goal. It should indeed be an invariable practice to supply managers with clear and common measurements in all key areas of a business. These measurements need not be rigidly quantitative; nor need they be exact, but they have to be clear simple and rational. They have to be relevant; and direct attention and efforts where they should go. They have to be reliable; at least to the point where their margin of error is acknowledged and understood, and they have to be, so to speak, self-announcing, understandable without complex interpretation or philosophical discussion.

Each manager should have the information he needs to measure his own performance and should receive it soon enough to make any changes necessary for the desired results, and this information should go to the manager himself, and not to his superior. It should be the means of self-control, not a tool of control from above.

This needs particular focus today, when our ability to obtain such information is growing rapidly as a result of technological progress in information gathering, analysis and synthesis. Up till now information on important facts was either not obtainable at all, or could be assembled only so late as to be of little but historical interest. This former inability to produce measuring information was not an unmixed curse. For while it made difficult effective control of a manager from above; in the absence of information with which to control him, the manager had to be allowed to work as he saw fit.

Our new ability to produce measuring information will make possible effective self-control; and if so used, it will lead to a tremendous advance in the effectiveness and performance of management; but if this new ability is abused to impose control on managers from above, the new technology will inflict incalculable harm by demoralizing management, and by seriously lowering the effectiveness of managers.

That information can be effectively used for self-control is shown by the example of General Electric:

General Electric has a special control service - the traveling auditors. The auditors study every one of the managerial units of the company thoroughly at least once a year - but their report goes to the manager of the unit studied. There can be little doubt that the feeling of confidence and trust in the company that even casual contact with General Electric managers reveals, is directly traceable to this practice of using information or self-control rather than for control from above.

But the General Electric practice is by no means common or generally understood. Typical management thinking is much closer to the practice exemplified by a large chemical company:

In this company a control section audits every one of the managerial units of the company. The results of the audits do not go, however, to the managers audited. They go only to the director who then calls in the managers to confront them with the audit of their operations. What this has done to morale is shown by the nickname the company's managers have given the control system: 'the management's secret service'. Indeed, more and more managers are not running their units to obtain the best performance but to obtain the best showing on the control section audits.

This should not be misunderstood as advocacy of low performance standards in of absence of control. On the contrary, management by objectives and self-control is primarily a means to obtain standards higher than are to be found in most companies today, and every manager should be held strictly accountable for the results of his performance.

What he does to reach these results he - and only he - should control. It should be clearly understood what behavior and methods the company bars as unethical, unprofessional or unsound. Albeit within these limits every manager must be free to decide what he has to do, and only if he has all the information regarding his operations can he fully be held accountable for results.

 

6. MANAGEMENT PROCEDURES

Management by self-control requires complete rethinking concerning use of reports, procedures and forms.

Reports and procedures are necessary tools, yet few tools can be so easily misused, and few can do as much damage. For reports and procedures, when misused, cease to be servants and become malignant masters.

There are three common misuses of reports and procedures.

 

1.

The first is the all too common belief that procedures are instruments of morality. They are not; their principle is exclusively that of economy. They never decide what should be done, only how it might be done more expeditiously. Problems of right conduct can never be 'procedurals' (indeed the most odious work in the bureaucrat's jargon); conversely, right conduct can never be established by procedure.

2.

The second misuse is to consider procedures a substitute for judgment. Procedures can work only where judgment is no longer required, that is, in the repetitive situation for whose handling the judgment has already been supplied and tested. Businesses suffer from a superstitious belief in the magical effect of printed forms and the superstition is most dangerous when it leads one into trying to handle the exceptional, non-routine situation by procedure. In fact, it is the test of a good procedure that it quickly identifies the situations which, even in the most routine of processes, do not fit the pattern but require special handling and decision based on judgment.

But the most common misuse of reports and procedures is as an instrument of control from above. This is particularly true of those that aim at supplying information to higher management - the 'forms' of everyday business life. The common case of the manager who has to fill out twenty forms to supply accountants, engineers or staff people at H.Q. with information he himself does not need, is only one of thousands of examples. As a result the manager's attention is directed away from his own job. The things he is asked about or required to do for control purposes, tend to appear to him as reflections of what the company wants of him, become to him the essence of his job; while resenting them, he tends to put effort into these things rather than into his own job. Eventually, his boss, too, is misdirected, if not hypnotized by the procedure.

Reports and procedures should be kept to a minimum, and used only when they save time and labor. They should be as simple as possible.

Every business should regularly find out whether it needs all the reports and procedures it uses. At least once every five years every form should be put on trial for its life.

Reports and procedures should focus only on the performance needed to achieve results in the key areas. To 'control' everything is to control nothing and to attempt to control the irrelevant always misdirects.

3.

Finally, reports and procedures should be the tool of the man who fills them out. They must never themselves become the measure of his performance and he must never be judged by the quality of the forms filled out - unless he be the clerk in charge of these forms. He must always be judged by his production performance and the only way to make sure of this is by having him fill out no forms, make no reports, except those he needs himself to achieve performance.



7. MANAGEMENT ETHIC

What the business enterprise needs is a principle of management that will give full scope to individual strength and responsibility, and at the same time give common direction of vision and effort, establish team work and harmonies the goals of the individual with the common good.

The only principle that can do this is management by objectives and self-control. It makes the common weal the aim of every manager. It substitutes for control from outside the stricter, more exacting and more effective control from the inside. It motivates the manager into action not because somebody tells him to do something or talks him into doing it, but because the objective needs of his task demand it. He acts not because somebody wants him to, but because he himself decides that he has to - he acts, in other words, as a free man.

The word 'philosophy' is tossed around with happy abandon these days in management circles. One has even seen a dissertation, signed by a manager, on the 'philosophy of handling purchase requisitions' (as far as one could figure out 'philosophy' here meant that purchase requisitions had to be in triplicate). But management by objectives and self-control may legitimately be called a 'philosophy' of management. It rests on a concept of the job of management. It rests on an analysis of the specific needs of the management group and the obstacles it faces. It rests on a concept of human action, human behavior and human motivation. Finally, it applies to every manager, whatever his level and function, and to any business enterprise whether large or small. It ensures performance by converting objective needs into personal goals and this is genuine freedom, freedom under the law.

 

8. MANAGEMENT TASKS

A manager's job should be based on a task to be performed in order to attain the company's objectives. It should always be a real job - one that makes a visible and, if possible, clearly measurable contribution to the success of the enterprise. It should have the broadest rather than the narrowest scope and authority; everything not expressly excluded should be deemed to be within the manager's authority. Finally, the manager should be directed and controlled by the objectives of performance rather than by his boss.

What managerial jobs are needed and what each of them is should always be determined by the activities that have to be performed, that is, the contributions that have to be made to attain the company's objectives. A manager's job exists because of the task facing the enterprise, and the job must have sufficient depth. It should always embody the maximum challenge, carry the maximum responsibility and make the maximum contribution, and that contribution should be visible and measurable. The manager should be able to point at the final results of the entire business and say: 'This part is my contribution.'

There are some tasks which are too big for one man and which can still not be cut up into a number of integrated, finite jobs. These should be organized as team tasks.

Outside of business, team organization is widely recognized. Almost any scientific paper, for instance, bears the names of three or four men; each one of the four (the biochemist, the physiologist, the pediatrician and the surgeon) does a specific kind of work. Yet, though each contributes only his own skill, each is responsible for the entire job. There is, of course, always a leader to the team; but though his authority is great, it is guidance rather than supervision or command. It derives from knowledge rather than from rank.

In business, teams are used a good deal more than the literature indicates. They are regularly employed for short term assignments in every large company. They are common in research work. Team organization, rather than the hierarchy of rank shown on the organization chart, is the reality in the well-run plant, especially in respect to the liaison between the manager and the heads of the technical functions reporting to him. For many tasks in process manufacturing or production new projects can only be done if organized on a team bases.

Essentially the most important team task in any business is the top management task. In scope, as well as in its requirements of skills, temperaments and functionality, it exceeds any one man's capacity. No matter what the textbooks and the organization charts say, well-managed firms do not have a one-man 'chief executive'. They have an executive team.

It is therefore of genuine importance that management understand the team organization, when to use it and how. Above all, it is important that management realize that in any real team each member has a clearly signed and clearly defined role. A team is not just chaos made into a virtue. Team-work requires more internal organization, more co-operation and greater definiteness of individual assignments than work organized in individual jobs.



9. MANAGER RESPONSIBILITIES

In discussing how big a manager's job should be, the textbooks start out with the observation that one man can supervise only a very small number of people - the so called 'span of control' - and this in turn leads to that deformation of management: levels upon levels, which impede co-operation and communication, stifle the fostering of new managers and erode the meaning of the management job.

If the manager, however, is controlled by the objective requirements of his own job and measured by his results, there is no need for the kind of supervision that consists of telling a subordinate what to do and then making sure that he does it. There is no span of control. A superior could theoretically have any number of subordinates reporting to him. There is, indeed, a limit set by the span of managerial responsibility: the number of people that one superior can assist, teach and help to reach the objectives of their own jobs. This is a real limit; but it is not fixed.

The span of control, we are told, cannot exceed six or eight subordinates. The span of managerial responsibility, however, is determined by the extent to which assistance and teaching are needed. It can only be set by a study of the concrete situation, where unlike the span of control, the span of managerial responsibility broadens as we move upward in the organization. Junior managers need the most assistance; their objectives are least easy to define sharply, their performance least easy to measure correctly. Senior men, on the other hand, have supposedly learned how to do their jobs; and their objectives can be defined as directly contributing to the business, their performance measured by the yardsticks of business results.

The span of managerial responsibility is therefore wider than the span of control. Further, where good practice would counsel against stretching the span of control, a manager should always have responsibility for a few more men than he can really take care of. Otherwise the temptation is to supervise them, that is, to take over their jobs or, at least, to breathe down their necks.

Whether a manager's subordinates are individuals or teams makes no difference in the span of managerial responsibility; however, a team should always have a small number of members. Teams should normally not exceed five or six members; and they are best if they have three or four members.

A team does not normally make a good superior manager. It should, in other words, have no subordinate managers - though individual members of the team may well have them. Assisting and teaching, the elements of managerial responsibility, are best performed by an individual.

 


10. MANAGEMENT DELEGATION

That each manager's job be given the broadest possible scope and authority is nothing but a rephrasing of the rule that decisions be pushed down as far as possible and be taken as close as possible to the action to which they apply. In its effects however, this requirement leads to sharp deviations from the traditional concept of delegation from above.

What activities and tasks (the enterprise requires) is indeed worked out, in effect, from the top down. The analysis has to begin with the desired end product: the objectives of business performance and business results. From this the analysis determines step by step what work has to be performed. But in organizing the manager's job we have to work from the bottom up. We have to begin with the activities on the 'firing line' - the jobs responsible for the actual output of goods and services, the final sale to the customer, for the production of blueprints and engineering drawings.

The managers on the firing line have the basic management jobs - the ones on whose performance everything else ultimately rests. Seen this way, the jobs of higher management are derivative; are, in the last analysis, aimed at helping the firing-line manager do his job. Viewed structurally and organically, it is the firing-line manager in whom all authority and responsibility centre; only what he cannot do himself passes up to higher management. He is, so to speak, the gene of organization in which all the higher organs are prefigured and out of which they are developed.

Quite obviously there are real limits to the decisions the firing-line manager can or should make, and within these limits, to the authority and responsibility he should have.

He is limited as to the extent of his authority. A process foreman has no business changing a salesman's compensation. A regional sales manager has no authority in somebody else's region, and he is also limited as to the kind of decision he can make. Clearly he should not make decisions that affect other managers. He should not make decisions that affect the whole business and its spirit. It is only elementary prudence, for instance, not to allow any manager to make by himself and without review a decision on the career and future of one of his subordinates.

The firing-line manager should not be expected to make decisions which he cannot make. A man responsible for immediate performance does not have the time, for instance, to make long-range decisions. A production man lacks the knowledge and competence to work out a pension plan or a medical programme. These decisions certainly affect him and his operations; he should know them, understand them, indeed participate as much as is humanly possible in their preparation and formulation, but he cannot make them; hence he cannot have the authority and responsibility for them; for authority and responsibility should always be task-focused. This applies all the way up the management hierarchy to the chief executive job itself.

There is one simple rule for setting the limitations on the decisions a manager is authorized to make, being: All authority not expressly and in writing reserved to higher management is granted to lower management. This is the opposite of the old Prussian idea of a citizen's rights: 'Everything that is not expressly allowed is forbidden'. In other words, the decisions which a manager is not entitled to make within the extent of his task should always be spelled out; for all other decisions, he should presupposedly have authority and responsibility.



11. MANAGEMENT CHANNELS

What then is the job of the manager's superior? What is his authority? What is his responsibility?

If only for aesthetic reasons, one is not over-fond of the term 'Bottom-up Management'. What it means, however, is important. The relationship between higher and lower manager is not just the downward relationship expressed in the term 'supervision'. Indeed, it is not even a two-way, up-and-down relationship. It has three dimensions: a relationship of up from the lower to the higher manager; a relationship of every manager to enterprise; and a relationship down from the higher to the lower manager. Each one of the three is essentially a responsibility - a duty rather than a right. Every manager has the task of contributing what his superior's unit needs to attain the objectives of his own job.

He has secondly a duty towards the enterprise; being to analyze the task of his own unit, and define the activities needed to attain its objectives. He has to establish the management jobs these activities require, and he has to help his managers to work together and to integrate their own interests with those of the enterprise. He has to put men in these jobs. He has to remove managers in his unit who fail to perform, reward those who perform well and see to it that those who perform superbly receive extraordinary return or promotion. He has to help the managers in his unit to develop to the limit of their capabilities and prepare themselves for the management tasks of tomorrow.

These are heavy responsibilities, but they are not responsibilities for what somebody else - a subordinate - is doing. They are, as all responsibilities should be, responsibilities for what the manager himself is doing. They are inherent in his own job, not in those of his subordinates.

Finally, the manager has responsibilities downward, to his subordinate managers. He has first to make sure that they know and understand what is demanded of them. He has to help them set their own objectives. Then he has to help them to reach these objectives. He is therefore responsible for their getting the tools, the staff, the information they need. He has to help them with advice and counsel. He has, if need be, to teach them to do better.

If a one-word definition of this downward relationship be needed, 'assistance' would come closest. Indeed, several arguably successful companies (notably IBM) have defined the manager's job in relation to his subordinates as that of an 'assistant' to them. Their jobs are theirs - by objective necessity. Their performance and results are theirs, and so is the responsibility. But it is the duty of the superior manager to help them all he can to attain their objectives.

The objectives of a managerial unit should always and exclusively consist of the performance and results it has to contribute to the success of the enterprise. They should always and exclusively focus upward. But the objectives of the manager who heads the unit include what he himself has to do to help his subordinate managers attain their objectives. The vision of a manager should always be upward - towards the enterprise as a whole. But his responsibility runs downward as well - to the managers on his team. That his relationship towards them be clearly understood as duty rather than as supervision is perhaps the central requirement for organizing the manager's job effectively.


 

MANAGEMENT RATINGS


This section analyses the relative aptitudes and effectiveness of the managers of the various Company operating units, when compared with the competitors.

The management levels covered are as follows:-

- Supervisory or Boardroom Management
- Executive Supervisory Team
- Senior Marketing Management Performance
- Senior Product & Process Management Performance
- Senior Financial Management Performance
- Senior Administrative Management Performance
- Middle Marketing & Sales Management Performance
- Middle Sourcing, Process & Distribution Management Performance
- Middle Financial & Accounting Management Performance
- Middle Administrative & Personnel Management Performance
- Sales & Customer Service Personnel Performance
- Buying, Process & Distribution Staff Performance
- Credit & Accounting Staff Performance
- Administrative & Secretarial Staff Performance


Target Company
Base Reference
SUPERVISORY / BOARDROOM MANAGEMENT

Direction & Delegation Rating

Management Levels & Degree of Responsibility

Management Planning & Procedures

Manager Control & Monitoring

Manager Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
EXECUTIVE SUPERVISORY TEAM

Direction & Delegation Rating

Management Levels & Degree of Responsibility

Management Planning & Procedures

Manager Control & Monitoring

Manager Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
SENIOR MARKETING MANAGEMENT

Direction & Delegation Rating

Management Levels & Degree of Responsibility

Management Planning & Procedures

Manager Control & Monitoring

Manager Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
SENIOR PRODUCT + PROCESS MANAGEMENT

Direction & Delegation Rating

Management Levels & Degree of Responsibility

Management Planning & Procedures

Manager Control & Monitoring

Manager Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
SENIOR FINANCIAL MANAGEMENT

Direction & Delegation Rating

Management Levels & Degree of Responsibility

Management Planning & Procedures

Manager Control & Monitoring

Manager Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
SENIOR ADMINISTRATIVE MANAGEMENT

Direction & Delegation Rating

Management Levels & Degree of Responsibility

Management Planning & Procedures

Manager Control & Monitoring

Manager Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
MIDDLE SALES + MARKETING MANAGERS

Direction & Delegation Effectiveness

Supervisory Levels & Degree of Responsibility

Activity Planning & Procedures

Sub-ordinate Control & Monitoring

Sub-ordinate Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
MIDDLE SOURCING / PROCESS / DISTRIBUTION MANAGERS

Direction & Delegation Effectiveness

Supervisory Levels & Degree of Responsibility

Activity Planning & Procedures

Sub-ordinate Control & Monitoring

Sub-ordinate Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
MIDDLE FINANCIAL + ACCOUNTING MANAGERS

Direction & Delegation Effectiveness

Supervisory Levels & Degree of Responsibility

Activity Planning & Procedures

Subordinate Control & Monitoring

Subordinate Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
MIDDLE ADMINISTRATION + PERSONNEL MANAGERS

Direction & Delegation Effectiveness

Supervisory Levels & Degree of Responsibility

Activity Planning & Procedures

Sub-ordinate Control & Monitoring

Sub-ordinate Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
SALES + CUSTOMER SERVICE PERSONNEL

Direction & Supervision Effectiveness

Supervisory Effectiveness

Activity Planning

Activity Control & Monitoring

Activity Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
BUYING / PROCESS / DISTRIBUTION STAFF

Direction & Supervision Effectiveness

Supervisory Effectiveness

Activity Planning

Activity Control & Monitoring

Activity Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
CREDIT + ACCOUNTING STAFF

Direction & Supervision Effectiveness

Supervisory Effectiveness

Activity Planning

Activity Control & Monitoring

Activity Performance & Efficiency

Performance Grid Definitions


Target Company
Base Reference
ADMINISTRATIVE + SECRETARIAL STAFF

Direction & Supervision Effectiveness

Supervisory Effectiveness

Activity Planning

Activity Control & Monitoring

Activity Performance & Efficiency

Performance Grid Definitions


HISTORIC FINANCIAL INDUSTRY DATA
 

HISTORIC FINANCIAL INDUSTRY DATA

 Financial Definitions


 

PERSONNEL MANAGEMENT

 

PERSONNEL MANAGEMENT BASED BALANCE SHEET FORECASTS


The PERSONNEL MANAGEMENT BALANCE SHEET FORECASTS section gives a series of Balance Sheet Forecasts for the Company and the industry using a number of assumptions relating to the financial decisions available to the management of the Company.

The Balance sheet forecast given shows the effects of financial improvements which any Financial Management is likely to recommend:

PERSONNEL MANAGEMENT SCENARIOS

  • Base Forecast : Median Market Scenario

  • Personnel + Staff Improvement

  • Sales Personnel + Staff Improvement

  • Payroll & Staff Cost Scenarios

  • Administration Cost Scenarios

  • Profit Impact From Payroll Cost Reduction
     

Managers in the Company will, in both the short-term and the long-term, have vital decisions to make regarding the financial improvements, margins and profitability and these decisions will need to be evaluated in light of the customers, markets, competitors, products, industry and internal factors. The scenarios given isolate a number of the most important factors and provide balance sheet forecasts for each of the scenarios.

The data provides a short and medium term forecast covering the next 6 years for each of Forecast Financial and Operational items. The Financial and Operational Data sections show each of the items listed below in terms of forecast data and covers a period of the next 6 years.

 

 

Financial Comparisons: Scenarios

 

Target Company

Base Reference Industry

 

MEDIAN  FORECAST : Financials

MEDIAN  FORECAST : Margins & Ratios

MEDIAN  FORECAST : Financials

MEDIAN  FORECAST : Margins & Ratios

 

 

 Financial Definitions

 

 

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